Kathmandu, Nepal on August 16, 1970, and studied at the Army Public School, in New Delhi. Koirala is also an accomplished Bharatnatyam and Manipuri dancer.
Koirala was born into a politically powerful Koirala family; her grandfather, and two of her great uncles were Prime Ministers of Nepal. Her first Movie was Pheri Bhetaula (We shall meet again), a Nepali movie released in early 1989. Her first Hindi movie was the Subhash Ghai directed Saudagar.
She went on to star in many hits such as 1942 - A Love Story and Bombay. Her performance in the latter gave her the Filmfare Critics Award for Best Performance. The film was directed by Mani Ratnam, and she starred in his next film Dil Se as well in 1998. Before that, she had another hit: Gupt: The Hidden Truth (1997). She played an important role in the latter alongside Kajol and Bobby Deol. She starred with Ajay Devgan in the film Company directed by Ram Gopal Verma but succeeding films, of which she did many, did not do as well at the box office.
She produced the small-budget caper-comedy Paisa Vasool (2004) in which she starred alongwith Sushmita Sen and was directed by Srinivas Bhashyam; this was probably the first ever chick-flick in Indian cinema in that it didn't have a male lead nor a love story.